Hill: WRS doesn’t need fixing

The success of WRS is one of the ways that for generations Wisconsin has been able to attract and retain a skilled public workforce.

Gov. Scott Walker delivers a speech on the third day of the Republican National Convention last summer. During the Walker years, shared revenue to cities and towns has declined, putting pressure on pension funds in some cases, writes Claiborne Hill.(Photo: Chip Somodevilla, Getty Images)

The Wisconsin Retirement System is a fully funded, cost-effective, model public pension system. The success of WRS is one of the ways that for generations Wisconsin has been able to attract and retain a skilled public workforce.

The WRS is a model pension program because of several unique features including an annuity adjustment that can move up or down, risk sharing between participants and employers, and the independent professional governance structure of the trust fund that allows actuarial and financial experts the latitude to make sage decisions without political interference or other limitations.

Sadly, local units of government that are not part of the WRS, and even the WRS itself, run the risk of having their hands tied by elected officials who do not understand the strength of the system.

Recent analyses that examine the accumulated costs facing local units of government in other pension and health benefits that are not part of the WRS over the next 30 years create a false impression that these costs are unmanageable.

The reality is that these benefit obligations are entirely manageable on the traditional annual pay-as-you-go basis. The current funding issues that a few county and municipal governments are facing are the direct and predictable result of the state Legislature slashing shared revenue and financially hog-tying local governments.

Public servants keep us safe, maintain our streets and water systems, teach and care for our children. They don’t get rich doing so. They are paid less than they would be in the private sector. The retirement benefits offered by the state and local units of government play a crucial role in attracting and retaining talented people. Over the years, these benefits were offered in lieu of salary increases.

Stoughton Police Chief Gregory Leck recently stated that degradation of pay and benefits, for a dangerous and sometimes thankless profession, has already meant fewer applicants. The Public Policy Forum found that the number of teachers leaving the profession has increased 22.5% in the last five years, enrollments are down 27.9% in teacher training programs, and most teachers who left their jobs in the metro Milwaukee area cited financial insecurity.

Attracting and retaining qualified public sector employees is a serious challenge. But it is one that is easier due to the strength of the WRS and the ability for those outside of it to meet obligations on a pay-as-you-go basis. This approach has worked.

The state of Wisconsin, counties and municipalities have worked diligently to protect pension and health care benefits in a transparent way that responsibly manages taxpayer dollars while honoring commitments made to retirees. Suggestions to the contrary do little to solve what problems do exist in keeping promises made.

The current challenges facing counties and municipalities that are not part of the WRS do not undercut the system’s overall strength — but restoring local controls to more effectively manage ongoing obligations and giving local municipalities their fair share of state revenue would be a welcome and fiscally responsible next step.

Claiborne Hill is state director of the Wisconsin Coalition for Retirement Security.